The rig maker Lamprell said that its UAE operations are expected to benefit significantly from its role in Saudi Aramco’s eastern province shipyard project, after the deal won approval from Lamprell’s largest shareholder.

Lamprell last year signed a conditional deal to be part of a joint venture with Aramco Development, a subsidiary of Saudi’s national oil company; National Shipping Company of Saudi Arabia (known as Bahri, Arabic for sea); and South Korea’s Hyundai Heavy Industries, with a mandate to build the yard near Jubail, which is about 100 kilometres north of Saudi Arabia’s eastern oil capital, Dammam.

Christopher McDonald, Lamprell’s chief executive, said he expects the deal to be “transformational” for the company, assuming it gets full shareholder approval. Lamprell Holding, which approved the deal earlier this week, owns about a third of Lamprell’s publicly listed shares.

The shipyard will be the first element in Saudi Arabia’s vast maritime project formally known as The King Salman International Complex for Maritime Industries & Services, aimed at fulfilling the goals of Saudi Arabia’s Vision 2030, which include having manufacturing and employment that previously had been outsourced relocated to the kingdom.

Lamprell says the yard is expected to start operations in 2019 and be fully operational by 2022.

In a statement to the London stock exchange, Lamprell said it expects the Saudi project to subcontract some of the rig component fabrication work to its UAE yards during the construction phase, as well as providing the opportunity to the UAE facilities to pre-qualify with Aramco to bid “for a significant pipeline of non-rig Saudi work”.

When it is up and running, Lamprell will run the zones at the yard designated to construct jackup drilling rigs, with Hyundai in charge of those allocated to building ships. There are long-term agreements in place mandating Aramco and Bahri to source significant work from the King Salman yard.

The deal “will not only make Lamprell a participant in potentially one of the largest yards in the Arabian Gulf but also provide access to the most important market in the industry and one of the largest players in the sector”, said Mr McDonald.

As with many in the oil services sector, Lamprell has been struggling as slumping oil prices affected the industry over the past two years.

In January, the company said it expected another tough year ahead, having already cut headcount by 5,300 to 4,000 since the previous quarter at its three main yards in Hamriyah, Sharjah and Jebel Ali.

Under the terms of the joint venture, the Saudi government funds $3.5bn of the development cost, with the partners picking up the rest. Lamprell will invest up to $140m for a 20 per cent stake in the joint venture, Aramco just over $350m for 50.1 per cent, Bahri $139m for just under 20 per cent and Hyundai $70m for 10 per cent.

Lamprell’s shares started rising on Tuesday in anticipation of the vote in favour of the project, and since then had gained 8 per cent as of late afternoon.